When is 60 days ,60 Days
Took stock out of 401(k) it is highly appreciated. Cost is one third of current price. Put in NQ brokerage account. The 60 days from reciept in NQ brokerage account ends in one week. If for some reason client does not want to pay the taxes and we have to put it back in company account does it have to be rescinded and sent back on the 60th day, or recieved back to origional qualified account by that day? Soo, when is does it have to be back in the account?
Thank you
SC
Permalink Submitted by Alan Spross on Thu, 2009-07-30 00:42
An indirect rollover must be received by the new custodian no later than the 60th day following the date the taxpayer received the original distribution. Day 1 is the day following receipt of the original distribution, etc. All calendar days count, although I believe the tax code extends to the next business day if the 60th day is a non business day.
That said, if an employee changes their mind about using NUA, they typically roll the shares over to an IRA. In most cases, they have separated from service and their prior plan will not accept the shares back. If the plan will accept the shares back, do they still account for them as NUA shares or has the NUA accounting been changed to exclude these shares?
Permalink Submitted by mk foss on Thu, 2009-07-30 01:28
Alan’s assumption seems to be that these are NUA shares. If the client has a “triggering event” that allows a lump sum distribution and NUA they’ll want to think that through before undoing the distribution.
However, if he/she wants to defer current taxation the client can either roll the shares into an IRA or back to the original plan. As long as the distribution has found a home in a qualifying account by the 60th day, the exact identity of that account is not critical.
Permalink Submitted by steve jackson on Fri, 2009-07-31 14:35
Alan and MGT4CPA
Does it matter that the transfer went directly from the Qplan(direct transfer)to her NQ brokerage account. They would not send shares to her? Share cost was 30 now 92 and going up and high quality at that, seems to be a no brainer to pay the taxes now.Who knows where taxes will be in the future.
Thanks
SC
Permalink Submitted by mk foss on Fri, 2009-07-31 16:30
It doesn’t matter for NUA purposes whether the shares were titled in her name or sent to a NQ account in her name. It’s probably easier for everyone involved to transfer to a NQ account rather than having certificates issued which must be turned over to a brokerage firm to sell.
Permalink Submitted by steve jackson on Fri, 2009-07-31 17:15
Thank you, it is as I thought. Have a good weekend
Permalink Submitted by Alan Spross on Fri, 2009-07-31 18:55
Of course, there is no guarantee where the top LT cap gain will be in the future either, and very very few states have lower rates on LT gains than on ordinary income.